The systematic risk of the market is measured by a:
A)beta of 1.0.
B)beta of zero.
C)standard deviation of 1.0.
D)standard deviation of zero.
E)variance of 1.0.

Question

Quizplus · Accepted Answer

Systematic risk, also known as market risk, is measured by beta. A beta of 1.0 represents the market's systematic risk. Beta is a measure of an asset's volatility in relation to the market as a whole. A beta of greater than 1.0 indicates higher volatility than the market, while a beta of less than 1.0 indicates lower volatility than the market. A beta of zero would indicate that the asset is not affected by the market, and therefore, has no systematic risk. The standard deviation and variance are measures of an asset's total risk, which includes both systematic and unsystematic risk.

The Systematic Risk of the Market Is Measured by A